Correlation Between Sprout Social and Alight

Can any of the company-specific risk be diversified away by investing in both Sprout Social and Alight at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sprout Social and Alight into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sprout Social and Alight Inc, you can compare the effects of market volatilities on Sprout Social and Alight and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sprout Social with a short position of Alight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprout Social and Alight.

Diversification Opportunities for Sprout Social and Alight

0.33

Correlation Coefficient

Sprout Social  Alight

Weak diversification

The 3 months correlation between Sprout and Alight is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Alight Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alight Inc and Sprout Social is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sprout Social are associated (or correlated) with Alight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alight Inc has no effect on the direction of Sprout Social i.e., Sprout Social and Alight go up and down completely randomly.

Pair Corralation between Sprout Social and Alight

Considering the 90-day investment horizon Sprout Social is expected to under-perform the Alight. In addition to that, Sprout Social is 1.58 times more volatile than Alight Inc. It trades about -0.02 of its total potential returns per unit of risk. Alight Inc is currently generating about 0.01 per unit of volatility. If you would invest  733.00  in Alight Inc on June 21, 2024 and sell it today you would earn a total of  14.00  from holding Alight Inc or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Sprout Social  vs.  Alight Inc

Sprout Social

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprout Social has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alight Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alight Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Alight is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sprout Social and Alight

The main advantage of trading using opposite Sprout Social and Alight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprout Social position performs unexpectedly, Alight can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alight will offset losses from the drop in Alight's long position.

The idea behind Sprout Social and Alight Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..